By Mohamed Garad
“There’s quartz here, there’s gypsum, there’s uranium, there’s iron ore, a lot of gold, potential gas, potential oil. All these things are waiting for East Africans to take came in and because they have not been exploited by Somalis because they didn’t have good government. So, if the Africans want to become rich, they will join, they will let Somalia in.”
These are not sentences from a historical text of a European “explorer” reporting back to imperial home in the late 19th century. Instead, they are said by a member of the Somali delegation speaking at Somalia’s readiness verification summit organized by the East African Community technical team in Mogadishu, Somalia, January 22nd—February 3rd, 2023. A careful read of these sentences might convey that after years of experiencing many national atrocities, Somalia may now be yielding its soil. However, in more precise terms, the sentences reveal fatal flaws in Somalia’s bid to join one of Africa’s most ambitious and integrated regional blocks, the East African Community, (EAC).
Without going further into a detailed analysis, first, let’s get a sense of the core ingredient of the subject in question, “economic integration’ of the member states of the regional block, which is the core transitional pillar towards EAC’s ultimate objective of achieving Political Federation according to the founding Treaty of the community.
Firstly, we should all know that there are various forms of possible economic integration based on the degree of integration, such as free-trade areas, customs unions, common markets, monetary unions, and political unions. EAC has one of the ambitious integration models with two pillars of economic integration, customs union and common market, already in place as a transitional stage towards monitory union and political federation.
If Somalia’s accession becomes successful and the EAC achieves its ultimate goal of becoming a political federation in the long run. In that case, Somalia will trade her national sovereignty to being a member state of the East African Federation, making her the only wholly Muslim member.
The current phase of the EAC’s integration and its founding Treaty mandates the free follow of goods, services and factors of production, i.e., people and capital, all across member states in the regional block.
The core rationale behind the said economic integration of the EAC is the economic view that abolishing various trade barriers on the national economies of the block leads the participating economies to operate at their optimum production level at the margin. This view is based on the assumption that removing tariffs and access to broader markets enhances productivity of labor and capital as free follow of outputs reduces the cost of production and access to new markets absorbs excess productions. The outcome is enhanced efficiency and specialization of the structural production sectors, which expands the production possibilities frontiers of the participating economies.
The central argument of this article is that Somalia’s national economy lacks the basic organizational form and domestic structural growth necessary for the successful participation of a higher level of economic integration like the one EAC demands. And if the country joins the block in its present situation, Somalia might not survive as a distinctive functioning member state of the federation in the long run.
This article is written in the spirit of Pan-Africanism and, therefore, doesn’t withstand the search for an integrated and interconnected region of East Africa and beyond, but the integration shouldn’t be sought at the cost of the weaker Africans. The integration mustn’t be exploitative.
Economics structural fault lines
At its present shape, Somalia’s current national economy fundamentally defies the core guiding principal purpose of economic integration, i.e., production efficiency and specialization, both in terms of organization and structural growth.
In simple terms, the war-ravaged Somali economy is in terrible shape. Overwhelmingly, there’s no proper firm structure economic agents and standardized capital and labor markets. With the exception of limited success stories in telecommunications and financial remittance, the backbone of the modern urban economy in the country is traders who sell foreign manufactured consumer goods in product markets. Most of these traders don’t have limited liability organizational form and sometimes even license. Quasi-employment is the source of labor in this industry as business owners mainly recruit family members and friends not because they add value and productivity but to give job opportunities for their loved ones. Most of these business ventures are insolvent and financially risk-prone.
The above reality negates the primary need to integrate these traders into transborder national economies, as they can’t even fully serve the national markets. They have less to sell and can’t compete in multinational markets. Saying so doesn’t mean ignoring the presence of successful Somali traders already in the East African Community markets, most of them went there because of security needs. However, these traders are a tiny fraction in terms of the population size of Somalia. They are mainly a subsidiary of relatively advanced and well-structured business sectors of the host countries like Kenya, Tanzania and Uganda.
On a structural basis, Somalia’s national economy is in Europe’s pre-industrial revolution stage. A key drive of economic growth and national development, the manufacturing sector is largely missing, and the agricultural sector (pastoral, fishery and farming) is mainly in a subsistence stage. The climate change and redundancy of prolonged dry seasons in the region further brutalize the agricultural sector of the economy, making more than 38% of the population (6.6 million people) face acute food insecurity as late as June this year. A significant proportion of the country’s people rely on humanitarian food aid for survival.
The above structural crises of Somalia’s economy also negate the need for a higher level of economic integration, which the founding Treaty of EAC mandates. There’s no industrial or agricultural growth and output development that seeks access to foreign markets, the primary goal of economic integration theory. Somalia’s national economy must first achieve domestic structural growth and development to request enhancing productivity through regional integration. Instead, Somalia should search for bilateral preferred trade agreements with the countries in the region in lieu.
Nevertheless, the Somali Federal Government and proponents of Somalia’s integration into the EAC try to sell the case in a bizarre argument. They argue that Somalia is full of natural resources, including maritime resources, and the integration “offers markets” for its natural resources. The quoted sentences in this article’s first paragraph depict their argument well. However, such a notion is not only a brutal assault on the primary rationale for economic integration theories but a terrible danger, depriving Somalia of her potential competitive advantage and condemning her people to economic degradation and perpetual economic dependency.
Rich natural resources in Somalia’s soil are a competitive advantage of the country. Opening up such strategic natural resources to foreign firms without domestically owned firms with competitive lead advantage in production capacity and specialization deprives Somalia of the competitive edge in the integration. It punishes her people to become employees of their own natural resources in the short run and the complete economic depletion of the country in the long run. The notion economically disarms the country, condemning Somalia and her people to major uncertainties.
The political dimension
An analytical review of the political dimension of the country shows a bleak situation. Though Somalia is recovering from decades of violence following the aftermath of the state collapse in 1991, unified Somalia remains elusive to this day regarding statehood and territoriality. National cohesion is in limbo as the state reconstruction model in place still struggles to deliver meaningful national reconciliation and proper transitional justice that revives the national spirit and brings trust within the nation and national unity.
On the contrary, there’s a deep-seated division and fragmentation of the country mainly on a clan basis—the basic social structure of the country—leading some even to search for their own separate sovereign state. Thus, the entire political order and state architecture in place is based on a divisive clan formula instead of a national civic pact and political conviction. With this, there’s no ratified constitution in effect nor supremacy of the rule of law, making the state institution highly prone to corruption and constraining the fragile federal government in Mogadishu in terms of legitimacy and territorial control of the country.
The presence of a lethal terror organization on the soil of Somalia, Al-Shabaab, has further exasperated the lingering national political crises. The extremist group has not only been threatening the people and the country’s stability but has also become a conducive environment for unvetted foreign interference, adding an international dimension to the security and political crises of the country. Thus, though the current government is waging an all-out war against Al-Shabaab, the risk of the terrorist group may not be eliminated until genuine national reconciliation is achieved and trustable state institutions that are based on civic pacts and national political ideals take charge of the country.
The combination of the lack of national cohesion, trustable state institutions, the rule of law, and the presence of terrorist threats suppress the opportunity for structural growth and sectoral economic development of the country that would necessitate the search for regional economic integration. The solution is finding the missing national cohesion and winning effective state institutions that deliver justice, the rule of law, and effective fiscal and monetary policies necessary for the revival, structural growth, and sectoral development of the national economy.
Somalia cannot search for regional integration without finding herself first.
Somalia lacks the necessary structural economic growth and nurturing political environment that are prerequisites for any successful regional economic integration. The structural bases of the war-ruined national economy are abysmal and there are no effective state institutions in power that would nurture its revival.
In her bid to join the EAC, Somalia’s rich natural resources are marketed as the primary price tag on her application. However, in this world of anarchy, this puts the country’s people in collective danger as any exploration and extraction of their natural resources in the current political context amounts to looting that could jeopardize both the people and the rest of the ecology for many years to come. Therefore, the accession of Somalia into the EAC at its present shape carries considerable risk and must be halted at least until Somalia finds herself and becomes a well-functioning nation-state and achieves a stage of structural economic development, necessitating the need for regional integration of such degree.
Bypassing these factual appeals entails the danger that Somalis may not survive as a distinctive functioning member state in the EAC federation in the long run. The risk that Somalis could become foreigners in their own native land is credible and must be avoided. The nation is not too foolish not to know that.
Email: [email protected]
Mohamed Garad is an entrepreneur and independent researcher who studies the political history, economics, and politics of the Horn of Africa region
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